2011 Saw Modest Airline Industry Growth, FAA Says

 - March 19, 2012, 1:49 PM
Commercial operations at San Francisco International Airport increased by 16 percent over 2005 peak levels, accounting for the highest growth among major airports, according to the FAA Aerospace Forecast. (Courtesy: San Francisco International Airport)

While last year produced a “mixed bag” of modest growth that favored mainline airlines over regional carriers and international over domestic travel, the FAA predicts that airline passenger travel will nearly double over the next 20 years.

In releasing its annual 20-year forecast March 8 in Washington, D.C., the agency as usual projected a long ascent in the level of airline travel. It predicts that revenue passenger miles (RPM), a metric representing one paying passenger traveling one mile, will climb from 815 billion in 2011 to 1.57 trillion in 2032, increasing by an average of 3.2 percent annually. The total number of people flying on U.S. airlines will inch up 0.2 percent to 732 million this year, then increase more rapidly to 1.2 billion into 2032.

The inevitable growth will continue even as available seat miles (ASM), a measure of airline capacity, remains flat this year after increasing by 3.4 percent in 2011, the FAA said. RPMs increased by 3.5 percent in 2011 and the number of passengers carried system-wide—the sum of domestic and international activity—increased by 2.5 percent to 731 million.

“Demand for air travel in 2011 grew slowly following a dismal 2010 that was marked by fading consumer confidence, tightening credit, surging unemployment, eroding corporate travel budgets and the pressure of debt restructuring in Europe and the U.S.,” according to the forecast. Nevertheless, it noted that airlines expanded capacity after three consecutive years of capacity reductions instituted to counter rising fuel prices and reduced demand. “Counterintuitively, with a slight increase in seats available to the traveling public, carriers were still able to raise air fares as demand returned. Combining this new-found pricing power with ancillary revenues, U.S. carriers finished 2011 with a net profit.”

The growth in fare-paying passengers was exclusive to mainline carriers. They saw a 3.4-percent increase in passengers last year, while passengers traveling on regional airlines declined by 0.4 percent, to 164 million. The number of mainline passengers flying domestic increased by 3.1 percent after three consecutive years of decline. Those flying internationally increased by 4.7 percent, showing “strong growth” in the FAA’s estimation.

The FAA expects passenger demand to edge up slightly this year, forecasting system RPMs to grow by 0.5 percent. All of the increase would come from international markets, the FAA said. The forecast projects an upturn in 2013, with system RPMs and the number of passengers increasing by 2.6 and 1.9 percent, respectively.